Multiple indicators point toward growth

It was difficult last week to find an economic indicator that was not pointing in a positive direction.

From retail sales to consumer confidence, from the Empire State Index on manufacturing to The Conference Board’s Leading Economic Index, there were signs that the U.S. economy is poised for continued growth.

A good place to start is the Commerce Department’s report on retail sales for July. Sales were up 0.6 percent, the largest increase in seven months, and they exceeded economists’ forecasts.

MarketWatch said strong demand for new cars and Amazon’s Prime Day specials helped the month be a successful one for retailers.

Excluding automobiles, gasoline, building materials and food services, sales rose 0.5 percent last month. Not only that, the government also revised its results for June to show that sales rose 0.3 percent, rather than falling 0.2 percent.

Consumer confidence, as measured by the University of Michigan’s Consumer Sentiment Index, rose at mid-August to 97.6 from a closing July reading of 93.4 and the index was at its highest level since January.

Richard Curtin, chief economist for the university’s Surveys of Consumers, attributed the increase in optimism to “a more positive outlook for the overall economy, as well as more favorable personal financial prospects.”

Curtin said the survey’s Current Conditions Index fell slightly from its peak reading in a decade, but the Expectations Index rebounded. Looking forward, Curtin said too few interviews were done after the violence that occurred in Charlottesville, Va., to determine how much it will negatively affect consumers’ outlook.

“The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August,” he said. “Moreover, the Charlottesville aftermath is more likely to weaken the economic expectations of Republicans, since prospects for Trump's economic policy agenda have diminished. Nonetheless, the partisan difference between the optimism of Republicans and the pessimism of Democrats is still likely to persist, with independents remaining as the bellwether group.”

Curtin said the university’s survey data “continue to indicate a gain of 2.4% in personal consumption expenditures in 2017.”

Separately, The Conference Board said its Leading Economic Index rose again in July, climbing 0.3 percent after an increase of 0.6 percent in June and an 0.3 percent increase in May.

A regional manufacturing index also showed improvement in July. The New York Federal Reserve’s Empire State Index rose 15 points, to 25.2, which was its highest level in three years.

MarketWatch said the index’s shipments gauge rose 1.9 points, to 12.4, and two employment readings -- the number of employees and the average workweek -- were higher. The new-orders gauge rose 7.3 points, to 20.6.

The Philadelphia Fed Manufacturing Index fell to 18.9 in August from 19.5 in July, but Trading Economics said the reading was slightly above market estimates of 18.5.

“It is the lowest reading since November last year, as inventories fell (-6.1 from 0.7 in July), employment rose slightly less (10.1 from 10.9) and price pressures went up for both prices paid (21.1 from 19.1) and received (13.5 from 9),” Trading Economics said. “On the other hand, notable improvements were seen for new orders (20.4 from 2.1) and shipments (29.4 from 12.2).”

Two housing market indicators – starts and permits – had weaker results in July. The Commerce Department said starts occurred at a seasonally adjusted annual rate of 1.16 million, 4.8 percent slower than in June and 5.6 percent lower than in July a year earlier.

Bloomberg attributed the decline to slower construction of apartments and a more modest decline in single-family homes.

"Soft July starts following on June's solid reading is a disappointment, as we had expected housing to pick up more robustly from a soft second quarter," Andrew Labelle, an economist at Citigroup in New York, told Reuters. "Still, we are inclined to look through some of the pullback, as it was concentrated in generally lower value and more volatile multi-family."

Housing permits fell 4.1 percent in July from the previous month, to a seasonally adjusted annual rate of 1.22 million. Permits were up 4.1 percent from July of last year.

More housing market data will be among the most important reports released this week. Economy watchers will see the Commerce Department’s report on new-home sales for July on Wednesday; the existing-home sales report for the same month from the National Association of Realtors is due Thursday.

Increases in one or both categories would reflect well on consumers’ confidence and their ability to spend.